GLOBAL CUSTODY SURVEY 2014 – METHODOLOGY

SYNOPSIS

Asset managers, asset owners and banks are asked to rate their global custodians.

Results for custodians that qualify will be published regardless of whether or not they actively participated in the survey.

CATEGORY TABLES

There are 10 core service category tables and seven value added service category tables. Each of these categories is broken down into sub-categories, on which the global custodians are actually rated by respondents.

Respondents are asked to rate their global custodians from 1 (very poor) to 7 (flawless) in each of the sub-categories (see list below). The scores of these sub-categories are combined to create an overall score for that service category.

For example, for the tax services category, respondents are asked to rate global custodians in three sub-categories: efficiency of obtaining tax relief at source; efficiency of reclaiming taxes; and solicitation of timely tax documentation. Each of the sub-categories is given an equal weighting and combined to create a table for tax services to be published in the magazine.

The all responses category tables, both raw data and weighted, will appear in the magazine, but others such as for multiple custodian may only be available online.

HEATMAP TABLES

The overall tables are presented in a new ‘heatmap’ format this year. Global custodians’ results are presented in alphabetical order with the winning score in each column highlighted. There are two global columns – global total and global average. There are three regional columns for Emea, the Americas and Asia Pacific (defined by where the respondent is based).

There will be at least six heatmap tables published in the magazine:

· All responses (weighted & raw data)

· Multiple custodian (weighted & raw data)

· Single custodian (weighted & raw data)

· Other heatmaps are published at the discretion of Global Investor/ISF, depending on the editorial value they represent, in print and/or online

HEATMAP CALCULATION METHODS

Raw data
Raw data tables (labeled unweighted in previous surveys) simply contain an average of the relevant scores of the category tables (which are themselves averages of the sub-category scores). Each category is assigned an equal weighting, regardless of how many sub-categories there are for that category or how important they are considered by respondents.

Weighted

The weighted tables contain a two stage calculation process for the first time, combing stages that allow for the respondents AuM and the importance that the respondents attach to each service category.

Stage 1: Weighted by AuM: The first stage attributes greater weight to the ratings of respondents with larger amount assets under management (AuM). Each respondent is put into a quartile depending on its AuM. The scores of the respondent are then given a weighting based on this quartile. As the boundaries of each quartile are determined by all the responses received in this year’s survey, the boundaries are unknown until the survey closes.

Note: This stage is the entire methodology of the weighted service category tables (as category importance is not relevant) and is the first stage of creating the weighted overall tables. The weighted category tables are published in print and online.

Stage 2: Weighted by category importance. The respondents are asked to rank the service categories (not sub-categories) in order of importance. The core and value added categories are mingled in this list (i.e. some value added services may be considered more important than some core categories). An average is then created based on the rankings of all respondents. These weightings are then applied to the weighted (by AuM) service category tables to create the overall weighted tables.

The more important a category is considered, on average by all respondents, the greater the weight is attached to that category (and by extension all the sub-category scores in that category). Weightings are normalised around 1 to preserve comparability with the raw data scores.

QUALIFICATION CRITERIA

Heatmap tables

All responses tables

To be included in the global average and global total columns, a global custodian needs to receive a minimum of 30 responses and must qualify for at least two geographical regions. Global custodians need to receive a minimum number of respondents to qualify for a region: 15 in the Americas; 15 in Emea; and seven in Asia Pacific.

Multiple custodian tables
Only scores from respondents that deal with more than one custodian are included. To qualify for the global columns, a minimum of 10 responses and qualification in two regions is required. Five responses are required for each of the regional columns.

Single custodian tables
Only scores from respondents that deal with one custodian are included. A minimum of 10 responses and qualification in two regions is needed to qualify for the global columns. Five is required for each of the regional tables.

Mutual fund, institutional fund, private client, asset owner and bank tables
A minimum of ten responses and qualification in two regions is required to qualify globally. Five responses are needed to qualify for a region. Scores from respondents that deal with multiple custodians and single custodians are included. Global Investor/ISF reserves the right to publish whichever tables it deems appropriate.

Respondents with AuM greater than $3bn tables
Only scores from respondents with assets under management of more than $3bn are included. A minimum of 10 responses and qualification in two regions is needed to qualify for the global columns. Five is required for each of the regional tables.

Respondents with AuM less than $3bn tables
Only scores from respondent with assets under management of less than $3bn are included. A minimum of 10 responses and qualification in two regions is needed to qualify for the global columns. Five is required for each of the regional tables.

Category tables

To qualify for a category a global custodian must reach the qualification criteria for the relevant heatmap table, i.e. for the all responses category table a global custodian must receive 30 separate respondents and qualify in two regions. A respondent must rate the custodian in one or more of the sub-categories for it to be considered a legitimate response for the purposes of qualification for that category.

CATEGORIES

Core services

Value added services

Note: Where a respondent ticks the n/a box, the sub-category is ignored when calculating the category score (i.e. for derivatives, if the respondent gives a score of 5 for quality of exchange traded services and ticks n/a for quality of OTC services, the score for derivatives is 5).

Valid responses

If different people from the same entity in the same region rate the same global custodian the responses are treated a single grouped response for the purposes of qualification. The two or more responses are averaged (where only one respondent rated the firm in for a particular sub-category this score is used unchanged).